Companies in New South Wales that avoid paying payroll tax on unpaid wages could soon face significantly harsher penalties, as part of a NSW government plan to crack down on wage theft in the state.
A suite of new laws announced by Finance and Small Business Minister Damien Tudehope on Wednesday will also see Revenue NSW given the ability to name and shame companies that have underpaid payroll tax on wages, and to pass information on to the Fair Work Ombudsman to assist wage theft investigations.
The new legislation sets out a number of penalty increases.
Employers that fail to keep records required to determine tax liabilities, or fail to produce those records to Revenue NSW when requested, will face potential penalties of $27,500 (250 penalty units), up from $11,000 (100 penalty units).
The same penalty increase will apply for employers that fail or refuse to lodge a document, statement or return as required.
Penalties for employers that willfully damage or destroy records will increase from $11,000 (100 penalty units) to $55,000 (500 penalty units), as will penalties for taxpayers who falsify or conceal the identity or location of a taxpayer or another person.
Employers that knowingly give false or misleading information to a tax officer, including deliberately omitting information, will also potentially face fines of $55,000 (up from $11,000); however, these will increase to a fine of $110,000 (1000 penalty points) or prison sentences of up to two years for repeat offenders.
Under the proposed changes, ministerial guidelines will also be developed to establish a framework for when Revenue NSW decides to name companies that have avoided payroll tax on unpaid wages.
The legislation will also give Revenue NSW the ability to reassess payroll tax up to five years after an initial tax assessment when an employer has underpaid wages.
In NSW, employers are liable for payroll tax if their annual wages are above $1.2 million. The current rate is 4.85%.
Unpaid wages are considered to be taxable wages for the purpose of payroll tax.
In a statement, Tudehope said the changes are designed to deter businesses from avoiding their payroll tax obligations, as well as other tax avoidance or minimisation practices.
The new legislation, he said, “sends a clear message to businesses — do the right thing by your employees and by the taxpayers of NSW”.
“Those who engage in wage theft deprive workers of their due wages and also minimise their payroll tax liabilities, while gaining a competitive advantage over those who do the right thing,” he said.
Anti-wage theft provisions were recently dropped from the federal government’s industrial relations legislation, despite bipartisan support for the changes that would have increased civil penalties and added a new criminal penalty for severe cases of underpayment.
Tudehope said the NSW government will continue to work with the federal government on efforts to address wage theft, and is calling for the federal opposition and Senate crossbenchers to work with the government on a national framework against wage theft.